For interest portion of home loan there is limit of 1.5 lacs.. lets say an assesse purchased and registered the house in his spouse' name.... and the loan docs.. he has his name as coapplicant (he is the one who pays, spouse doesnt hav any income) . can he still claim that interest..under which section (as the actual interest comes to 5-6 lacs)??
He is having another house (vacant) in his own name..! whether income from house property has to be shown??
what would be the wealth tax impact?
can it be planned by showing the house (first one) given on rent and claiming the entire interest paid and adjusting the same against the salary income..!!
26 May 2012
The wife has no income and the husband is repaying the loan and it is assumed that the building also in the name of joint owner. The husband is only discharging the obligation of his wife. He will be entitle to 50% of the interest to be deducted from his income subject to limit of Rs. 1.50 Lacs. However, if he let the property on rent, he will be entitle to deduct the full interest from his income and 50% of rental income.
01 August 2024
Here's a breakdown of how to handle the home loan interest, income from house property, and wealth tax implications given the scenario:
### **1. Claiming Home Loan Interest**
- **Interest Deduction Limit**: Under section 24(b) of the Income Tax Act, you can claim a deduction of up to ₹2 lakh per annum on the interest paid on a home loan for a self-occupied property.
- **Property in Spouse's Name**: Since the house is in the spouse's name, but you are the co-applicant and are paying the loan, you can still claim the deduction under section 24(b) for the interest paid. The deduction is available to the person who is liable to repay the loan and has an interest in the property, even if the property is in another person's name.
- **Claiming the Deduction**: To claim the deduction, you need to show the home loan interest under "Income from House Property" in your tax return. You can claim up to ₹2 lakh under section 24(b) for a self-occupied property. If the actual interest paid exceeds ₹2 lakh, the remaining amount cannot be claimed under section 24(b) but might be eligible for deduction if the property is rented out (discussed below).
### **2. Income from House Property**
- **Vacant Property**: The vacant property you own will be considered as "Income from House Property" under section 22 of the Income Tax Act. Even if the property is vacant, it will be deemed to have a notional rent (deemed rent) which is considered as income.
- **Self-Occupied Property**: For the property in your spouse's name, if it is self-occupied, you can claim the interest deduction under section 24(b) up to ₹2 lakh.
### **3. Wealth Tax Impact**
- **Wealth Tax Act**: The Wealth Tax Act, which was applicable until FY 2015-16, was abolished from FY 2016-17 onwards. Therefore, wealth tax does not apply from FY 2016-17 and onwards. For the years when it was applicable, the value of the house property (excluding the property used for business) was considered for wealth tax computation. If you are referring to a period before FY 2016-17, the value of the property would have been included in your wealth tax calculation.
### **4. Planning and Tax Adjustments**
- **Renting Out Property**: If you decide to show the first house as rented out: - **Interest Deduction**: You can claim the entire interest paid on the home loan (beyond ₹2 lakh) as a deduction under "Income from House Property" for the rented property. - **Rental Income**: The rental income from the property will be taxed under "Income from House Property." You can claim a standard deduction of 30% on the net annual value of the property.
- **Adjusting Against Salary Income**: If you show the house as rented out, you can claim the entire interest against the rental income, which might reduce your taxable rental income. This can indirectly reduce your taxable income.
### **Summary**
1. **Interest on Home Loan**: Claim up to ₹2 lakh under section 24(b) for self-occupied property. If the property is rented out, you can claim the full interest deduction against rental income. 2. **Income from Vacant Property**: Show the notional rent as income under "Income from House Property." 3. **Wealth Tax**: Not applicable from FY 2016-17 onwards. For earlier years, the property value was considered for wealth tax.
For precise planning and to ensure compliance with tax laws, especially if you have multiple properties and complex scenarios, consulting a tax professional or financial advisor is advisable.
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